Opt in to Stay Covered: New Rules on Overdraft Protection
Thursday, February 25th, 2010No question, getting your denied debit card back from an apologetic cashier can be embarrassing. And in an emergency situation—you’re stranded and need a taxi or a tow, for example—having the funds you need may even help you stay safe. Overdraft protection can ensure you have the money you need when you need it, even when the cash in your account is a little low. However, new federal regulations are changing overdraft protection services, and action on your part may be necessary.
Overdraft protection—under GHCU’s “Courtesy Pay” program—is a discretionary service GHCU provides for eligible members. If, for example, a member makes a purchase for $100 but only has $50 in his or her checking account, GHCU may honor this purchase, allowing the checking account to go negative, to a maximum of $700. Overdraft fees may be levied for each occurrence. See our rates and fees schedule for more information on fees.
Currently, overdraft protection is automatic for eligible GHCU members who have not chosen to opt out of the program. Federal regulations take effect July 1, 2010, and prior to August 15, 2010, members who want and are eligible for overdraft protection will need to opt in to the program in order to be covered, even if they have been covered in the past.
GHCU has made no changes to its Courtesy Pay program at this point; however, to comply with the new regulation, we will soon be contacting eligible members who have a GHCU checking account with more information about this change and providing them with an opportunity to specify their overdraft protection preference. Those who opt in will continue to receive overdraft protection—at the discretion of the credit union—as long as they remain eligible. For eligibility requirements, please see our Membership & Account Agreement.
If a member elects not to opt-in for this overdraft protection, certain transactions may be denied: specifically, any time a member uses his or her debit card for day-to-day purchases (for example, buying groceries) and ATM transactions (for example, withdrawing cash) but does not have sufficient funds in his/her account. In this case, the request for funds may be denied. Checks and automatic bill payments are not covered by this regulatory change; however, such payments may still be covered through other overdraft protection services you have with us.
To ensure that your preference is recorded quickly and appropriately, if you have a GHCU checking account, please watch your GHCU account statements for your opportunity to opt in for overdraft protection. For more information on the new overdraft rules, you can visit the website of the Board of Governors of the Federal Reserve System.
thank for the new overdraft protection
Thank you for giving us fair warning on the changes. Your overdraft protection service is a good one.
Thanks,
Jenna
I wish to remain in the program it has saved me many times when I’ve been in a pinch. I get my statements by e-mail will I still be able to respond. This is a great program and i want to see it continue.
Julia Boyd
Julia,
I’m glad the program has been useful for you–that’s exactly what it’s for! Absolutely, you will get notification and an opportunity to opt in. Keep an eye on your eStatement for further instructions; that will be coming soon. If you miss the notification, feel free to call our Virtual Branch at 206-298-9394 or visit your local branch. Thank you for the question!
Jenna,
Thanks for your message! We think it’s a good service, too; we’re glad to be able to continue offering overdraft protection and happy that regulations are helping all bank and credit union members be more aware of how such protections work.
Thanks, Regis! Keep an eye out for your opportunity to opt in in advance of the August 15 deadline!
If people want to use their checking account as a potential line of credit just like a credit card let them opt-in. But please, spare me the anecdotes of embarrassment and state up front that ‘overdraft protection’ is a euphemism for yet another line of credit attached to a fee. I doubt that the default to ‘opt-in’ was an accident. Go look at the fee schedule and figure the effective percentage you potentially are paying on the credit you are getting for an overdraft. The new federal regulations are because people finally realized that the banks were doing quite well from these fees. For many people a little feedback related to a dwindling account is one of the best ways to budget.
Chris,
I absolutely agree with you that everyone needs to educate themselves on fees and the possible consequences of opting in or out of overdraft protection. That’s why we are informing members well in advance of the deadline: we want members to be able to make an informed decision, whichever way they decide to go.
We always advocate that members opt in for online banking. They can track their account and set up email alerts if their balance drops below a level that they designate. Thanks for reminding me to make that point again.
I appreciate your comment–thanks for adding to the ongoing conversation!
I have been lucky enough not to have to use the overdraft protection, but it’s nice to know i have a little bit of a safety net if i need it. I joined GHCU 10 Years ago and have been a happy customer all those years. Love you guys!
Good morning, Erik, and thank you for the love!
Any tips you’d like to pass on to others about how you’ve avoided needing overdraft protection? Do you use online tools, map out a monthly budget, anything like that? We can always use good advice from those who have been successful.
Thanks again, Erik–we’re lucky to have such wonderful members here at GHCU!